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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Roll-over relief: furnished holiday lettings: general

TCGA92/S241 and TCGA92/S241A

Roll-over relief is available for assets used for the purposes of commercial letting of furnished holiday accommodation as defined

  • in ITTOIA05/Part 3 Chapter 6 for Capital Gains Tax and
  • in CTA09/Part 4 Chapter 6 for Corporation Tax on chargeable gains

see PIM4100+. This guidance uses the term FHL to describe property that meets the requirements of the legislation.

TCGA92/S241(3) and (3A) treats all FHL held by a person or partnership or body of persons in the UK as assets of a single trade for the purpose of roll-over relief. On 22 April 2009 HMRC announced that FHL situated outside the UK but within the European Economic Area (EEA) would be accepted as assets of the same trade for the purpose of roll-over relief from the latest of these dates:

  • 1 January 1994
  • the date on which the country in question joined the EEA and
  • the date on which the property was first let as FHL.

The EEA consists of all of those States that are members of the European Union plus Norway, Liechtenstein and Iceland.

For disposals from 6 April 2011 onwards (or, for companies, for disposals in accounting periods beginning on or after 1 April 2011) TCGA92/S241A deems all FHL within the EEA (other than in the UK) to be a single trade for the purposes of roll-over relief. So there are separate deemed trades; one for UK FHL and one for FHL in other EEA states. TCGA92/S152(8) permits gains on FHL of one trade to be rolled over against acquisitions of FHL in the other, see CG60500. So a gain made on UK FHL may be rolled over against EEA FHL, or vice versa. as long as the two trades are carried on at the same time or successively.

Roll-over relief applies to the deemed trades in the same way as it applies to any other trade, with the exception described at CG61452 where a gain on the disposal of holiday accommodation attracts private residence relief.

The definition of FHL will become more restrictive with effect from 2012-13, see PIM4113.